The California Farm Bureau Federation has shared that California’s Insurance Commissioner, Ricardo Lara, at a Thursday press conference, unveiled a plan aimed at addressing the departure of property insurance companies from the state and improving insurance coverage options in wildfire-prone regions.
The plan, announced after failed negotiations in the state Legislature, permits insurance companies to incorporate forward-looking catastrophe modeling when setting premium rates. In return, they will be obligated to write a guaranteed percentage of policies for properties in high-risk wildfire areas. That number is 85% of the levels in which they provide coverage for properties statewide by December 2024.
The move comes as California’s insurance market has struggled under the weight of frequent wildfires and natural disasters. Of the 20 most destructive fires in the state’s history, 14 have occurred in the past decade.
Many property owners in these high-risk areas have had their insurance policies canceled, affecting the viability of businesses dependent on coverage to secure loans. The California FAIR Plan, the state’s insurer of last resort, has seen its policies double since 2016.
To entice insurers back to the state, the regulatory changes will enable them to use catastrophe modeling, consider climate-related risks, and expedite rate plan approvals. In return, insurers must commit to writing policies in high-risk areas at specified levels by December 2024, including assisting FAIR Plan policyholders to transition back to the regular insurance market.
These changes aim to provide more insurance choices, maintain fair pricing, and protect homes and businesses in wildfire-prone regions. California Farm Bureau President Jamie Johansson expressed support for the competitive market that ensures comprehensive risk protection for consumers and farmers.
Photo by Marcus Kauffman on Unsplash
